Identify the Influence of Asian’s FDI Inflows to Indonesia

Abstract

The main objective of this research is to identify or evaluate the determinants of Foreign Direct Investment (FDI) inflows into Indonesia using the extended Gravity model. Panel data is used to estimate and evaluate the empirical results based on data for the years 1987 to 2014. Is also examines FDI inflows between different locations and their geographical distance from Indonesia. The results show that the inflows of FDI into Indonesia, which are supply-driven, are significantly influenced by 10 investing partners from Asian countries. The result shows that any increases in GDP, GDPGR between investing partners and Indonesia potentially attract more FDI into Indonesia-emphasising that distance has a negative impact on FDI.